The Commerce Department announced Monday that sales edged up 1.3% to a seasonally adjusted 307,000 unit annual rate, which was the fastest pace in five months, still below analysts’ expectations. The supply of new homes in the market would last 6.3 months at the current pace of sales. The median sales price of new houses sold in October 2011 was $212,300; the average sales price was $242,300. The seasonally adjusted estimate of new houses for sale at the end of October was $162,000.
The report suggests housing continues to drag on the U.S. economy and is a long way from recovering.
While new homes sales represent a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders. Many Americans believe it is just too risky to buy a home right now so soon after the housing bubble burst from four years ago.
While home prices have fallen, unemployment at over 9% has taken its toll on consumers. Many consumers who wish to buy a home simply cannot due to higher down payments and loan qualifications they cannot meet.
Mortgage rates continue to hover at historic lows. Refinancing has been a boon for mortgage companies, but that does nothing to address the glut of houses for sale on the market. Also, with the number of foreclosures and short sales on the market, consumers are more apt to purchase one of those vice a new home.
Sales of previously owned homes rose slightly last month to a seasonally adjusted annual rate of 4.97 million units, the National Association of Realtors said last week. That’s below the 6 million that economists say is consistent with sales in a healthy market and barely ahead of last year’s totals, which were the fewest since 1997.
New Home sales data for November 2011 will be released on Friday December 23, 1011 at 10:00 am ET.